In a bit of a retreat, T-Mobile (News - Alert) Deutschland, which has a policy of blocking all VoIP traffic to and from its mobile phones, now has retreated a bit. T-Mobile Deutschland now says it will allow VoIP from mobiles this summer, so long as customers pay a $14 a month fee, possibly higher, for the privilege. Basically, customers on more-expensive plans will pay the lowest VoIP surcharge.

 

T-Mobile Deustchland's explanation for the charge is refreshingly honest in some ways, a bit convoluted at worst.

 

"It would not be fair to customers who don't use VoIP if these additional costs were to be shared across all customers," says Georg Pölzl, T-Mobile Deutschland managing director.

 

In other words, he argues mobile VoIP imposes specific costs which the company simply is trying to recover from specific users of one service.

The rationale will be seen in some quarters as disingenuous.

 

The claim that network investments, rather than protecting an existing business model, are the motivation, will be scoffed at in some quarters. But it is an honest reflection of long-term reality.

 

Nor does Pölzl entirely skirt that issue. He notes that mobile networks were built based on revenues from voice telephony and mobile data. "If this basis is no longer certain, then neither is the operational future of the networks," he says.

 

That is a frank admission that mobile VoIP will, in fact, undermine the financial foundation of the business.

 

In many ways, the practice is analogous to charging users for text messages, email access or Web access, in a sense. It may be a way of generating revenue from a new application, logical from T-Mobile's point of view since VoIP will largely destroy its core business.

 

But some will object, arguing that they've already paid for data access and VoIP is just something people should be able to do with the access they already paid for.

 

But Pölzl is frank in saying that "T-Mobile wants to continue offering its customers state-of-the-art technology in future and needs a reliable basis to do so." That's a financial reality. If it loses most of its voice revenue, and cannot replace all of those revenues with new services, the business is not viable.

 

"In this way, we are building a bridge between the different customers’ needs for the most competitively-priced and innovative services," says Georg Pölzl, T-Mobile Deutschland managing director.

 

I'd be hard pressed to say I've heard such frank talk from U.S. mobile service provider executives. It's a welcome change in an industry that bases virtually all of its strategy on withering voice revenues, first in landline and then in mobility as well.

 

In other utility markets, we've seen water and power executives frankly say they are raising rates because consumers have faithfully followed utility executive exhortations to conserve and reduce use.

 

Of course, when consumers do so, fixed costs do not go away and must be covered by rate hikes.

 

One wonders if communications executives might not be better served if they were more honest with users about why and how charges are applied.

 

In any event, I found Pölzl's frank comments refreshing and to the point. Some products have high margins, others have moderate margins and some lose money. That's what a "loss leader" is. Until the time when huge capital investments are not necessary, fixed costs must be covered, whether the service is communications, appliances, water or electricity.